The French first employment contract: Efficient screening device or Kleenex contract?

Mehmet Bac*, Serife Genc

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)


The controversial novelty in the French Labor Law reform, withdrawn in April 2006, was a contract form under which employers could dismiss young workers on probation without justification. Proponents argued that the reform would improve screening and boost employment whereas opponents dubbed it the "Kleenex contract." We show that the new contract can produce an incentive to dismiss even suitable workers but that this harmful effect could be mitigated by instituting public ratings of firms according to their propensity to dismiss young workers. Informed workers could then respond to job offers according to firms' layoff records, which in turn would restore promotion incentives and efficient screening.

Original languageEnglish
Pages (from-to)77-88
Number of pages12
JournalJournal of Economics/ Zeitschrift fur Nationalokonomie
Issue number1
Publication statusPublished - Sept 2009
Externally publishedYes


  • Contracts
  • Efficient screening
  • French labor law reform


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